Take the car industry for example. The Japanese are currently trouncing the Americans, a result of focusing on smaller fuel-efficient cars and hybrids while the Americans continued to release bigger people-movers.
Did the Japanese know, when they were designing the current range of cars earlier this decade, that the price of fuel was going to go through the roof in 2006, or that people’s concerns about climate change would start to manifest in their purchasing patterns? Not entirely, but it was a reasonable guess, and one they were willing to back.
Picking market conditions for products with long development times is absolutely crucial within many businesses. Take the mobile phone industry as another example. Finnish giant Nokia missed the move by consumers towards flip phones that manifested in early 2004, and their results and market share suffered accordingly. At the same time, newer entrants such as Samsung and LG were able to take share.
There are methodologies for making such decisions, and some will claim there is a science to it. But just as many find it difficult to explain – as though making such decisions is an intuitive process based upon years of experience within an industry.
Walking around the recent 3GSM conference in Barcelona, it was easy to see how many companies are hedging their bets with a range of devices designed to meet a variety of consumer needs. There are some broad trends, however. In terms of design, slim is definitely in, as are bigger screens. From there, phones tend to diverge. Some concentrate on music, others on photography, and others on business applications, such as email.
Making these judgement calls is part of the everyday activity of Rikko Sakaguchi, the senior vice-president and head of product and application planning for the handset maker Sony Ericsson. It is his role to plan the product portfolio, with 700 employees working with him to architect, develop and create the "proposition" for each device. Generally his team works two to three years out. This makes flexibility the key to success.
Generally his team works two to three years out. This makes flexibility the key to success.
"The requirements and the needs keep changing every quarter," Sakaguchi says. "So we have a foundation and an architecture where we can plan products piece by piece."
Earlier this decade the company made two key decisions to leverage its existing Walkman and Cybershot brands into the phone line-up, hence delivering the benefit of customer association with high quality music and photographic experiences respectively. More recently it incorporated the Bravia brand for high-definition video, although this effort has not yet reached the market outside of Japan.
Utilising the Walkman brand especially was a shot in the arm for Sony Ericsson’s handset sales, and helped establish itself as a player in the field (although even it could not predict the hype that would surround the unveiling of Apple’s iPhone in January this year).
Whatever the company comes up with next, however, will have to meet shifting goal posts. Sakaguchi says the future of mobile phones will not be about the technology, but about the experiences that handset makers can give to their consumers.
"The decision that we have taken is to create a proposition that can stand out for its experience. Because the technology will be there anyway. We don’t develop the semiconductors, we develop the nice experience."
Much of his thinking today is around the user interface. On a technology front, he is looking at ideas such as using triangulation to tell the network where the user is, and is even considering the possibility of incorporating GPS (global positioning chips) into Sony Ericsson’s handsets.
But more and more the goal is to design around the experience that having such technology will deliver – not the technology itself.
"How can we create the nice user experience when that GPS is integrated?" Sakaguchi asks. "We have to have some more breakthroughs around innovation in the user interface, meaning if you somehow use the GPS functionality it must be (accessible with) one click, or maybe zero clicks."
But as for how his organisation makes those decisions about where to place its bets, even Sakaguchi shakes his head and says he can’t give much of an empirical basis for his decisions.
"The decision to make a product? That’s difficult to answer."
There’s no telling how many potentially great products never saw the light of day because society and the market turned one way and not another. The future of mobile phones is still very much up for grabs.
Brad Howarth is a journalist and the author of ‘Innovation and the Emerging Markets: Where the Next Bulls Will Run’, a study on the challenges facing small Australian technology companies.
You can read his blog at lagrangepoint.typepad.com